As in previous years, supervalue wines such as Two Buck Chuck continued to sell well, making up 12 percent of California table wine shipments to the state's home market.

Still, there are signs that the grape glut, which has been driving down prices, is drying up. That means bargain prices could evaporate, too, said Robert Smiley, a business professor at the University of California, Davis.

"It's going to be more and more difficult to make and sell supervalue wines at $3 and $2," he said. "They're still around, but I think that category is going to diminish just because it's going to get unprofitable to produce it."

Consumers also were interested in wines priced $7 and higher a bottle, according to the Wine Institute. Those sales accounted for 32 percent of volume of California table wine shipments and 64 percent of revenues.

California wines accounted for 64 percent of the U.S. market, down slightly from the 67 percent reported last year, but still accounting for about two out of every three bottles sold in the United States.

Looking at wine by color, reds edged whites, according to ACNielsen sales data from supermarket, liquor and drug stores. Red wines had a 40.5 market share, whites 40.4 and blush wines just over 19 percent.

Historically, reds ruled in the '70s but were eclipsed by whites in the 1980s, Horiuchi said.

Despite the success of reds, a white wine, chardonnay, was the leading variety sold last year. But red wines merlot and cabernet sauvignon had the No. 2 and 4 spots, respectively, with white zinfandel coming in at No. 3.

Although Americans still drink far less wine than people in other wine-producing nations, U.S. wine consumption has grown 63 percent since 1991, according to the Wine Institute.

Smiley said age may be influencing that statistic, with baby boomers and their children -- the "echo boom" -- moving into the age bracket where people are more likely to have the income and inclination to drink wine.

Despite the softening dollar, imported wines increased slightly as a share of the U.S. market, from 25 percent in 2003 to 26 percent, with 73.1 million cases shipped in 2004.